Strategic Objective 1: To advocate for a fair and effective tax system for financing development in Africa.
Taxation should be viewed within the broader perspective of DRM as it is fundamental to state building and forms the foundation of the social contract between state and citizen. It is well recognized that without taxation there can be no viable state (OECD and AFDB 2010). In this context, there is growing concern that heavy reliance on resources other than broad-based domestic taxation can be a disincentive to develop institutional capacity, accountability to citizens and ultimately promoting prosperity. Governments therefore need to create conditions that are necessary to contribute to employment creation and revenue generation which are important sources of state legitimacy.
Furthermore beyond its financing role, DRM thus helps to strengthen fiscal institutions, which, often, are viewed as imperatives of state building, and key to improving accountability. In essence, more effective and transparent tax systems can contribute to broader governance reforms in Africa. Also, less dependency on external finances can promote domestic ownership of development programmes, thereby helping to improve the allocation of resources in a way that maximises social outcomes. DRM could therefore help lay a solid foundation for a ‘new Africa’ and one in which no-one gets left behind.
With this in mind, AFRODAD believes that fair, transparent, equitable and improved taxation systems in Africa are key to broadening the resource base for financing various development initiatives in Africa as well as contributing to solving the unfair and inefficient tax systems that penalizes the poor and favours the rich.
Moreover, tax systems themselves are not gender neutral and regressive taxes, such as consumption taxes, tend to disproportionately fall on women. In both cases, regressive taxes and their effects threaten to undermine substantive equality for women.
Finally, high levels of tax abuse undermine the principle of equality and non-discrimination, given that evaders end up paying less than taxpayers with the same, or less, capacity to pay.